Slow and steady won the race in sector exchange traded funds this month as investors favored defensive ETFs tracking utilities stocks and dividend payers.
Every now and then I like to run a screen of my list of over 1,000 exchange traded fund and notes which ranks which areas of the investable landscape are the highest above their respective 20-day moving averages. The point in doing this is to see if there is a consistent message underlying market dynamics over the past rolling month period. This is not to suggest necessarily that continued strength is likely, however momentum can be a very powerful phenomenon.
The main takeaway here is that four of the top 10 ETFs and ETNs on the list are utilities trackers such as Utilities Select Sector SPDR Fund (NYSEArca: XLU).
In a way, this should not come as a surprise. If the bond market’s way of investing in the stock market is to tilt towards high-yield corporate or “junk” bonds, then logically it makes sense that the stock market’s way of playing the bond market is through utilities. [Utilities Hold Up]